Escopeta jack-up rig leaves Gulf for Cook Inlet

Posted: Tuesday, March 01, 2011

By Tim Bradner

Escopeta Oil and Gas President Danny Davis says he plans to load the Blake 151 jack-up rig onto the Kang Sheng Kou heavy-lift vessel at Freeport, La., on March 8 and be on the way to Cook Inlet shortly thereafter.

"I'm on the way," Davis said. "I have all the funds I need. We're well capitalized. The only thing that scares me is the state of Alaska investing in my competitor."

The Alaska Industrial Development and Export Authority is considering a $30 million investment in Kenai Offshore Ventures, a company formed by Buccaneer Energy, to bring a heavy jack-up rig from Asia to Alaska.

Davis said Escopeta has invested $10 million so far to pay the mobilization costs for the Blake 151 and also the demobilization costs, which must be paid in advance, and another $15 million to $18 million will have to be paid when the rig gets to Alaska and gets into position in Cook Inlet.

The state of Alaska has enacted a generous incentive -- 80 percent to 100 percent of the cost of the first three wells up to $25 million per well -- for the first jack-up rig to arrive in Cook Inlet and start drilling.

That's a prize Davis intends to claim if his rig gets to the inlet in May and rigs up, but Escopeta must still lay out almost $30 million to get the rig in place, no small undertaking for a small independent.

Davis said he believes a waiver from the U.S. Jones Act that he secured some years ago for use of a foreign-build heavy-lift vessel is still legally valid, but he is seeking a verification of that from the U.S. Homeland Security agency. Also, a state air quality permit previously issued to Escopeta for its first planned well at the Kitchen Light prospect should be still valid, Davis said.

The Blake 151 rig will generate less air emissions than the jack-up rig Davis planned to use a few years ago when he secured the permit, and it should fit under the existing permit, Davis said.

Meanwhile, the Kang Sheng Kou heavy-lift vessel is en route to the Gulf of Mexico from its last assignment in Nigeria and is now in the mid-Atlantic, Davis said. On Feb. 21 the ship was 4,873 nautical miles from Freeport.

The Blake 151 rig, owned by Spartan Drilling Co., is in the Gulf Copper Shipyards in Galveston, Texas, being outfitted with wind guards, boilers, insulation and other preparations for Cook Inlet, according to Steve Sutherlin, an Alaska spokesman for Escort.

Some further work will be done on the drilling unit when it arrives in Alaska.

"Escopeta had contracted for use of the Offshore Systems dock facility in Kenai where last minute needs can be addressed. Escopeta and Spartan have offices at the dock," Sutherlin said in an e-mail.

Davis said a blowout preventer capable of withstanding 15,000 pounds per-square-inch pressure will be installed on the Blake 151 at the request of the Alaska Oil and Gas Conservation Commission, the state regulatory agency that oversees petroleum drilling safety.

"We agree with that and we're happy to do it. We're drilling deep, into the Jurassic, and the pressures are higher in deeper wells," Davis said.

AOGCC will also inspect the rig before it leaves the Gulf of Mexico, Davis said.

Davis said Kitchen Light is the first prospect the Blake 151 will drill. If the rig gets finished in time, the rig may move to a second prospect to the west, the Kitchen Thrust Fall Trap. Both prospects are on state oil and gas leases held by Escopeta.

"What I need now is for some oil companies to get some guts and sign up with us to drill more wells in the inlet. I think that will happen once we get the rig on the ship and get under way. Then they will see that we're real," Davis said.

The Blake 151 rig can drill deep, as far down at 20,000 feet, and can operate in waters as deep as 160 feet. The rig Buccaneer is considering for purchase is heavier, with a capability of operating in waters as deep as 300 feet. Like the Blake 151 this rig will have a blowout preventer capable of handling pressures of 15,000 pounds per square inch, Buccaneer Alaska President Jim Watt said in an interview.

Buccaneer's plan is to have its heavier rig available to use elsewhere off Alaska's coasts, such as in the Chukchi Sea.

Davis said his rig will have a lower "day rate" for operations than Buccaneer' rig, and that means smaller prospects in Cook Inlet can be tested because the exploration wells will be less expensive for the leaseowners.